US arabica coffee settled modestly higher for the second straight day on Wednesday, as late speculative support buoyed prices after the market hit a five-week low on Monday, traders said. "There were two buyers in the market today, both of the non-commercial end. One an outright buyer, another was a buyer against London.
The New York-London arbitrage widened out," one dealer said. NYBOT open-outcry July coffee rose 0.45 cent at $1.1040 a lb., while key September gained 0.30 cent to settle at $1.1220 a LB, in dealings from $1.1240 to $1.1100, marking a triple bottom.
The rest closed in a range from 0.05 to 0.40 cent higher. On the ICE New York Board of Trade electronic platform at 1:47 pm EDT (1747 GMT), September coffee was up 0.30 cent at $1.1220 a lb.
The market will not be showing signs of heading toward the bulls, however, until the benchmark contract closes above $1.1305, traders said.
"The market is showing a positive tone overall," one broker said. Coffee producers and co-operatives bought all 4 million bags of coffee price support contracts offered by the government in top producer Brazil on Wednesday, the agriculture ministry's crop supply agency Confab said.
Any impact from the auction, however, was already priced into the market, traders said. In London, robusta coffee futures closed lower on pressure from speculative selling and profit taking after a recent nine-year peak, dealers said.
Life's September coffee closed down $24 at $1,867, trading from $1,851 to $1,894. NYBOT estimated 4,092 lots traded in New York open-outcry compared to the 2,939 lots officially tallied in floor trade on Tuesday, when 13,424 contracts traded on the ICE screen.
As of June 26, open interest increased 728 lots to 152,703 contracts. In the No 3 producer, Colombian coffee growers asked the government on Tuesday to draw up a "Marshall Plan" to rebuild the sector after damage done by the strengthening local peso.
Invoking the name of the US plan to rebuild Europe after World War II, growers say their coffee has lost competitiveness overseas as the peso has strengthened 25 percent against the dollar over the last 12 months.
Meanwhile, Brazil was forecast to see mostly dry conditions and near to above-normal temperatures through on Monday, DTN Meteorlogix said.